Donatella's daughter comes of age in an empire

JANE BARRETT, Reuters News Service

Published 5:30 am, Wednesday, June 30, 2004

MILAN, Italy - Some girls dream of getting a car or a designer dress for their 18th birthday but when Allegra Versace Beck woke up today she got a much bigger present -- half the Versace fashion empire left to her by her late uncle Gianni.

It is a poisoned chalice for the petite teenager who now has the final say in tough decisions Versace needs to make to return to profit and secure its place on fashion's A-list, including a possible stake sale.

Gianni Versace doted on Allegra and left his share of the fashion company and a couple of houses to the girl he called his "little princess" when he was shot dead in Miami in 1997.

At that time Allegra was 11 and most of the decisions taken since have been made by her mother Donatella, who owns 20 percent of Versace and now designs the label, and by her uncle Santo who owns the rest and is company chairman.

Allegra, who has just finished school in Milan, comes of age as the house struggles to regain the glory it had under the flamboyant genius of Gianni Versace.

Since he died, sales have dropped as the economy slowed and fashionistas switched to the likes of Roberto Cavalli and Dolce & Gabbana for the brash, sexy style Versace was famed for.

To help bounce back, Santo Versace has said the Milanese firm could sell as much as 25 percent of the group to get fresh cash and has hired Lazard and CSFB to study various offers.

Fashion watchers do not expect Allegra to change this course of action any time soon, although she will be able to put forward her own ideas when the shareholders meet on July 5.

Instead of waltzing in and bossing her family around, the reclusive brunette plans to study business and drama in the United States from September and dreams of becoming an actress.

"Allegra has decided to take full responsibility for her quota and exercise her prerogatives," Managing Director Daniele Ballestrazzi said in a newspaper interview today.

"Nothing will change. It will just make decision-making more fluid as we'll no longer need to go through her lawyers on questions of strategy," he added.

PROBLEMS WITH PARTNERS

The thorny question of any sale will be how much the three family members' stakes are diluted and how much control a future partner would demand over the towels-to-perfume business, estimated to be worth around 400 million euros ($485 million).

Media have named several private equity groups and fashion entrepreneurs like Alberta Ferretti as flirting with Versace. Speculation that Gucci's former dream team of CEO Domenico De Sole and designer Tom Ford would come in has waned.

"We would prefer a financial partner to an industrial one, not just to avoid any operational interference but because right now the company needs a partner to help the family create value," Ballestrazzi said.

Further out, Versace would like to list on the stock market, a possibility it looked at in the 1990s when luxury firms were commanding stellar prices but which it shelved when Gianni died. Ballestrazzi said an IPO was at least three years away.

For now, Allegra has the tough task of making sure Versace meets its target of pulling back to profit this year and picking a path that will ensure the business, as well as the memory, of her beloved uncle lives on.